Weekly Check-in – 05/13/2013

Aw man. This week was not a good week. I’m not incredibly upset. I just know it could have been better. Here goes.

5/5/2013    
  Groceries  $            13.28
  Transit  $              8.25
  Food  $          3.71
  Lunch  $        20.00
  Ikea  $        16.54
  Clothing  $       133.00
     
5/6/2013    
  Groceries  $        16.42
     
5/7/2013    
  Coffee  $          2.06
     
5/8/2013    
  Lunch  $        10.15
  Coffee  $          4.31
     
5/9/2013    
  Coffee  $          2.35
  Groceries  $        24.95
     
5/10/2013    
  Coffee  $          2.10
  Beer  $        21.15
  Lunch  $          8.10
     
5/11/2013    
  Transit  $          2.75
  Coffee  $          4.41
  Coffee  $          3.65
  Dinner  $        21.97
  Groceries  $        19.07
  Transit  $          2.75
     
5/12/2013    
  Transit  $          2.75
  Groceries  $        15.74

So there’s just a few items I could have trimmed. There was the huge clothing blowout (which I guess isn’t horrible, I needed new clothes). There’s the typical couple of coffee trips, and then a really bad day on the 10th where I had coffee, went out for lunch, and picked up beers to drink with a friend.

The 11th wasn’t that good either, having spent too much on coffee and having dinner out (it wasn’t that good, either) and picking up groceries. Not the best, certainly not.

That said, next week’s check-in won’t be that great, as I racked up a bunch more taking my mother out for mother’s day lunch. Ah well, that’s how it goes.

How’s the balance? $175 budgeted, $359.43 spent, for a net of -$159.43. I do take some solace in the fact that I really didn’t needlessly waste too much money.

You win some, you lose some.

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Life’s Warning Signs That You Have A Debt Problem

The sheer number of people in both US and in Canada has struck me as interesting, if only because 9 times out of 10 it is caused by foolishness. Getting buried in debt is often an incremental process — one poor decision after another. It’s caused by one night out too many, one at a time. It’s caused by careless or reckless spending, by unnecessary new clothes, by expensive morning coffees — all one at a time.

I see some people’s debt numbers and am absolutely blown away — I can manage my debt, I know I can. It’s not as bad as some people have it. It’s something I can deal with and something I can certainly handle. I’m not at risk of losing all my stuff or having my wages garnished, I’m just in a position where I’m paying a stupid amount of money on interest.

That said, while my debt isn’t as bad as some people’s, I do like to think that this crash course I’ve had makes me an expert on debt (oh yeah, I work in finance, too, so there’s that).

So, what are the warning signs that you might wind up starting a Kicking the Debt blog in a number of months? Here you go:

  1. You don’t like looking at your credit card statements. Basically, fear of your statement means that you made some dumb purchases. The only times I’ve ever feared looking at my statement was after buying some stupid crap — these days, I look at my statement daily and enjoy it because every dollar was well spent.
  2. Your credit card balance increases every month. Yeah, this is a very bad sign — this means that a) you’re either not paying your bills (even the minimum payment) or b) you’re spending too much.
  3. You don’t know how much you owe. While knowing right to the penny is good, if you can’t even ballpark your debt within a hundred dollars you’re probably in trouble.
  4. You’ve considered bankruptcy. Maybe you’ve just vaguely considered it, but if you have, it might mean you have more debt than you can handle.
  5. You hide purchases from your spouse. A sign that maybe you’re a compulsive shopper, too.
  6. Your credit cards are almost maxed out… so you’re applying for more. A very, very bad sign. I don’t need to go into more detail.

Of course, these are all just warning signs — they aren’t definitive. You might be really good with your credit cards, for example, so don’t need to look at your statements (though you should to check for fraudulent charges), or you’re in some other unique situation that means these don’t apply.

But odds are if more than one applies, you could have a serious debt problem building on your hands.

So what can you do? I’d recommend nipping the problem in the bud while you can!

  • Cut expenses where you can. 
    Look at your spending — seriously look at it — and see what you’re spending money on that you don’t need. Buying meals out all the time? A few coffees a day? Excessive purchases of luxury / entertainment items? Those gotta go. Manage your cashflow!
  • Contact your lenders!
    This is a bit of a secret trick many people neglect to try out — lenders will very often offer ways to help you pay off the debt. They can lower the minimum payment, for example, or offer a reduced interest rate, or give you a payment holiday. You’ll still be on the hook for the majority of the debt and interest usually still accrues even when granted a payment holiday, so only use this if you really need it.
  • Pay more than the minimum payment, always!
    Never pay the minimum payment. Always pay more than it. Whenever you pay the minimum payment, the majority of it goes to paying off interest, while just a few dollars go to the principal. If you pay twice the minimum payment, you speed the payment process along because so much more is going to the principal payment. Do this always.
  • Ditch the plastic. Cut those credit cards up, lock them away, whatever — stop using them (but don’t forget to keep on paying those bills!) Use cash until you’re ready to. I’ve only recently gotten comfortable using them again, and who knows how long that will last.

As someone who has a debt problem, let me offer a final word of advice: don’t let debt dominate your life like it has mine. I’ve paid untold thousands in interest (I’m sure I could have paid my debts off with the interest money alone and had enough left over for a vacation) which is stupid. It’s dominated my life, kept me from doing the things I like, and I’m sure has made my hair thin (or genetics, who knows). In any case, it’s caused me a ton of stress, stress I’d be better off without.

Don’t Be Cheap, Just Be Smart

I don’t like cheap people, as a rule. My mom — a successful businesswoman — is a very cheap woman (of course, I love my mom). She’s cheap to the point of painfulness. She doesn’t like tipping, for example, and will usually skate by with the minimum tip possible — usually as low as 10%, and very rarely higher. It’s painful to see. She only ever buys clothes from Walmart and, well, the list goes on.

On the other hand, she’s a successful businesswoman — she has a net worth in the millions and goes on vacation with her boyfriend every couple months. So I have to hand it to her — she’s obviously done something right.

What I’ve realized is the difference between smart people — people who manage their money well — and not-so-smart people:

Smart people buy experiences. Not-so-smart people buy things.

When I look at my accumulated debt, what I realize is that my credit is so poor because I spent all my money on things. Nights out, for example; crap off eBay; videogames; books; DVDs; the list goes on. I look around at some of the stuff I have and have no idea how it got here. I can’t tell you how much it cost me (especially after interest), but I can tell you how much joy it has brought me: not much.

But when I think about some of my other trips, I can tell you memory after memory. I can tell you what restaurant Marie and I ate at the last time we went wine touring in Kelowna; I can tell you the oyster bar we went to in Seattle, and I can tell you the name of the expensive (and incredibly tasty) restaurant we ate at for our anniversary. I can tell you a million different details about my two-month long school trip in Prague.

All those memories are from experiences. They’re from things I did. Not things I bought, but things I did. That’s the key difference. Sure, they all cost money — everything does, really — but what I really paid for was the experience. It wasn’t the new jacket, or the new book, or the new flat-screen whatever; it really was the experience.

When I look at my mom’s spending, I can critique her for buying bad clothing, cheap cars, and whatever else. But I really can’t knock her for flying out to a different tropical country every two months — not only is she and her business deep in the black, but she’s spending her money on the only thing worthwhile. An experience.

Stop Wasting Money with Bank Fees!

I hate bank fees with a fiery passion.

Basically, the way a bank works is this: you put money in, and the bank spends it. The bank invests it in various things, leverages it, whatever. For this, they pay you interest. That’s what that monthly payout of a few cents is for.

So it’s unreal that a bank would charge you money for taking out your money. I can understand cash advances and so on from credit cards, but to get at your own money? Sure, there’s a fee to install ATMs or whatever, and I can see why third-party ATMs charge a fee, but banks should never charge their customers money. It’s absolutely absurd, in fact: it’s your money! Could you imagine if you gave me your money to hold on to, I spent it while you weren’t looking, replaced it, and then charged you when you wanted it back? It’s patently ridiculous — banks make money hand over fist with your money. They should use that money to pay you for using your money.

That’s why I love my credit union. It’s not a “big bank”, but I’ve never had any problems — I’ve pulled out US funds in the States no problem, I’ve paid bills to others, the online banking is great, the customer service is incredible, the one time my account got skimmed I got the money replaced. It’s been a perfectly smooth ride — I’ve also never had a hold on cheques put in, which is something people tend to complain about.

What makes my credit union so great is that it they have a no fee chequing account. None (plus, overdraft protection!). No fee to pay bills, no fee to pull money at a credit union ATM, no money to get online, no money for statements, nothing. I don’t even know what fees other people pay — I’ve been with them for years and love them to death. Plus, they offer interest at 1.25% for their no-fee Savings, which is pretty competitive (though, not as good as some, admittedly).

If you’re paying bank fees, you need to find a way out. It’s unjust for a bank to charge you bank fees — if you can, find a competitor who offers no fee chequing, like my credit union, Coast Capital Savings. I don’t think you’ll regret it.

Of course, if you’re OK with an online bank, I recommend ING Direct. They’re awesome and I haven’t had any trouble with them — you can use your current bank for clearing cheques and ING for everything else (or move it all to ING!). Check out my Orange Key on the right of the website — when you create an account and deposit more than $100, ING will toss in an extra $25 — I’ll get a referral bonus as well.

Weekly Check-in – 05/06/2013

My check in for the week of 04/28/2013  – 05/04/2013.

All in all, a fairly good week. I had to buy a present for a friend on the first Sunday, which kind of skewed my budgeting for the week. I managed to bring a lunch most days, thus saving a fair bit of coin. I was disappointed at having to bring a lunch on the 2nd, because I was supposed to meet a friend for lunch — he has a lead on a great job opportunity but couldn’t make it. I wouldn’t mind buying him lunch because the job he’s found for me would mean a 50% pay raise (!), so I figure it’s worth it. That would also affect my budgeting going forward, especially the rate at which I pay down debts. Ah well. Here it is:

4/28/2013
Gift $35.78
Bus pass $2.75
Groceries $7.45
Coffee $3.34
4/29/2013
Lunch $8.00
Coffee $4.31
4/30/2013
Coffee $4.31
5/1/2013
5/2/2013
Coffee $1.88
Lunch $8.00
Coffee $2.15
Groceries $13.26
5/3/2013
Coffee $2.20
5/4/2013
Dinner $48.07
Transit $2.75
Groceries $2.24
Food $5.89
Misc $3.20

Looks good, huh? The damage for the week is a mere $155,57 compared to a budget of $175, which is awesome considering that Marie and I went for dinner on the 4th. Elisha of The Debt Breakup asked the other day if budgeting meant the death of spontaneity, and I guess what I did was “planned” for spontaneity — I spent really well during the week so I could have a blowout on the weekend. Of course, I could have ended the week at $107.50 for the weekly total instead of $155.57 had I not gone out, but c’est la vie, I guess.

I also felt really good because I didn’t have to panic or anything about paying rent — because I had been so good about it, the money was sitting in my account, ready to go — I didn’t even notice it slip out! That’s an awesome feeling for sure. I’m especially stoked about May 1 — not a penny spent (other than rent, which I don’t count as “daily spending”)!! Such an awesome feeling for sure.

I did hit a bit of a stumbling block yesterday though, which I guess will be covered in next week’s check-in. Long story short I ended up spending $169.77 in a single day. $20 of it was for lunch, which is really the only spending part I regret… the rest was worthwhile. Something for next week, though! If I can get to next Sunday with having only spent $5.23, I’ll squeak under budget. It’ll take a few weeks I think before my budget catches up with the spending. I’ll definitely need to rethink my budgeting, anyway.

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